Ontario Employer Health Tax (EHT), explained
The EHT is a payroll tax Ontario employers pay on total annual wages above an exemption threshold.
The Employer Health Tax (EHT) is a payroll tax charged by the Ontario government on the total remuneration an employer pays in a year. Most private-sector employers get an annual exemption, and the tax applies only to payroll above that threshold.
Who pays it
Employers with a permanent establishment in Ontario that pay wages, salaries, and most taxable benefits. The exemption and the applicable rate depend on the size of your Ontario payroll — the 2026 figures are in the table below.
Why it matters for your books
EHT is separate from CRA source deductions, so it's easy to overlook until a bill arrives. Keeping payroll totals current all year means the EHT is calculated and set aside as you go, not discovered at year-end.
The exemption and rates for 2026
EHT is charged on the total Ontario remuneration you pay in a year — wages, salaries, bonuses, commissions, and most taxable benefits. Most private-sector employers get an annual exemption, and the tax applies only above it:
| Annual Ontario payroll | Exemption | EHT rate on the excess |
|---|---|---|
| $1,000,000 or less | Full exemption | Nil for most private employers |
| Over $1,000,000 up to $5,000,000 | $1,000,000 | Graduated, from about 0.98% |
| Over $5,000,000 | No exemption | 1.95% on total payroll |
Figures are the published 2026 amounts, verified August 2026. Federal and Ontario thresholds change annually — confirm the current year before relying on them.
Instalments, the annual return, and associated employers
Employers whose Ontario payroll passes roughly $1.2 million generally have to pay EHT by monthly instalment, due the 15th of the following month, rather than settling once a year. The annual EHT return is generally due March 15 for the previous calendar year, and it is separate from everything you file with CRA — which is exactly why it gets forgotten until a notice arrives.
One trap is worth naming: the exemption is shared among associated employers. Groups that run several corporations cannot each claim a full $1,000,000 exemption, and restructuring a group without checking the EHT consequence is a common and expensive oversight. If you operate more than one company, have the association question settled before payroll grows past the threshold.
This is general information, not tax advice for your situation. Get started and a Canadian accountant will give you the answer for your business.
Common questions
Is EHT the same as CRA source deductions?
No. EHT is a provincial payroll tax paid to Ontario, separate from the CPP, EI, and income tax you remit to the CRA.
Do small employers have to pay EHT?
Many small employers fall under the annual exemption and owe nothing, but you still need to track payroll to know where you stand. Confirm the current exemption with your accountant.
What is the EHT exemption in Ontario for 2026?
Most private-sector employers get an annual exemption on the first $1,000,000 of Ontario remuneration, so employers under that threshold generally pay no EHT. Above it, graduated rates apply from about 0.98%, reaching 1.95% for employers with payroll over $5,000,000 — who receive no exemption at all.
When do I have to pay EHT instalments?
Generally once your annual Ontario payroll passes roughly $1.2 million, EHT is paid by monthly instalment due the 15th of the following month. The annual return is generally due March 15 for the prior calendar year. EHT is administered by Ontario, not CRA, so it sits outside your regular source-deduction remittances.
Do multiple corporations each get the $1,000,000 exemption?
No — the exemption is shared among associated employers, so a group of related corporations cannot each claim a full exemption. This catches owners who split operations across companies for other reasons. Check the association rules before payroll in the group approaches the threshold.